IRS Publication 538: Accounting Periods and Methods

Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. A required tax year is a tax year required under the Internal Revenue Code or the Treasury Regulations. You cannot adopt a tax year by merely: Filing an application for an extension of time to file an income tax return; Filing an application for an employer identification number (Form SS-4); or Paying estimated taxes. This section discusses: A calendar year. A fiscal year (including a period of 52 or 53 weeks). A short tax year. An improper tax year. A change in tax year. Special situations that apply to individuals. Restrictions that apply to the accounting period of a partnership, S corporation, or personal service corporation. Special situations that apply to corporations. Calendar Year A calendar year is 12 consecutive months beginning on January 1st and ending on December 31st. If you adopt the calendar year, you must maintain your books and records and report your income and expenses from January 1st through December 31st of each year. If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you obtain approval from the IRS to change it, or are otherwise allowed to change it without IRS approval. See Change in Tax Year , later. Generally, anyone can adopt the calendar year. However, you must adopt the calendar year if: You keep no books or records; You have no annual accounting period; Your present tax year does not qualify as a fiscal year; or You are required to use a calendar year by a provision in the Internal Revenue Code or Treasury Regulations. Fiscal Year A fiscal year is 12 consecutive months ending on the last day of any month except December 31st. If you are allowed to adopt a fiscal year, you must consistently maintain your books and records and report your income and expenses using the time period adopted. 52-53-Week Tax Year You can elect to use a 52-53-week tax year if you keep your books and records and report your income and expenses on that basis. If you make this election, your 52-53-week tax year must always end on the same day of the week. Your 52-53-week tax year must always end on: Whatever date this same day of the week last occurs in a calendar month, or Whatever date this same day of the week falls that is nearest to the last day of the calendar month. Election. To make the election for the 52-53-week tax year, attach a statement with the following information to your tax return. The month in which the new 52-53-week tax year ends. The day of the week on which the tax year always ends. The date the tax year ends. It can be either of the following dates on which the chosen day: Last occurs in the month in (1), above, or Occurs nearest to the last day of the month in (1), above. When you figure depreciation or amortization, a 52-53-week tax year is generally considered a year of 12 calendar months.